How to Grow a City in Honduras: Past, Present, Future of the ZEDEs

Film to Convey the Opportunity, the Pitfalls

By Zach Weissmueller

Honduras may be on the brink of a major breakthrough, one with implications for not only much of Central America, but for struggling nations around the world. Or so says Mark Klugmann, cochair of the Committee for the Adoption of Best Practices, the board responsible for approving applicants who wish to open a Honduran Zone for Economic Development and Employment (ZEDE).
“It’s a very exciting moment, because this project, if it accomplishes what it’s capable of doing, will demonstrate inside of Honduras and to the world that the capacity for solving problems and creating jobs in particular can go forward with a velocity that very few people have been expecting,” says Klugmann.



In their short, tumultuous, and sometimes controversial life thus far, what today are known as ZEDEs have assumed a number of different forms: from expected Nobel Laureate economist Paul Romer’s ambitious “charter city” concept, of towns governed in partnership with outside nations, to their current form as autonomous legal and political entities operated by private investment firms.

A Challenge of Trust, Not Ideology

In the making of this documentary series, How to Grow a City in Honduras, we learned that many Honduran citizens remain skeptical of the project and uncertain about its details. But this skepticism tends to arise not from ideological opposition to markets and competition, or a fear of “neocolonialism” — a charge often levied at Paul Romer’s “charter cities” by media critics.
Rather, concerns of Hondurans seem to be of a more practical nature, grounded in an understanding of their own history: they distrust a national government that has let them down time and time again.
“If it’s the government [behind it], it’s a failed system,” said one student we talked with at UNITEC University in San Pedro Sula.
“Maybe it’s not that we don’t believe in this project,” said another student. “It’s just that we think it’s going to happen, and it’s going to fail, just like all the other projects have failed.”
The fact that the adoption of the ZEDE law happened in the wake of the dismissal of President Manuel Zelaya from power does little to put many Hondurans at ease. But Klugmann emphasizes that it’s precisely this sort of political instability that the ZEDEs are meant to protect against.
“The problems that exist are actually the reason why the ZEDE is necessary,” says Klugmann. “It’s the instrument that can attract the investment and create the number of jobs that Honduras needs to escape from poverty.”
Klugmann points to the success of similar zones such as Hong Kong, Singapore, and even Dubai as evidence that good laws and an independent judiciary make all the difference.

Proof in the Pudding

Can the ZEDEs replicate the success of those models in Honduras? And how likely is this to actually happen in the wake of so many setbacks and changes?
Without trying to predict the future, what we can say after completing this documentary series is this: the law has finally cleared the legislature and the courts, and there’s nothing delaying the ZEDEs, except for the approval process of the Committee for the Adoption of Best Practices.
While the board will likely be thorough and careful in considering proposals, especially when approving the first round of ZEDEs, it’s composed of seasoned political operatives who know that having the governing party of Honduras on their side presents a finite opportunity. They are too savvy and have worked for too long on this project to let the moment pass by delaying and risking a change in political fortunes.
As for the notion that this idea can change Honduras and, eventually, the world: we can only hope. In a country where people are sending their unaccompanied children on dangerous journeys across national borders for the chance at a better life, ZEDEs offer the possibility of a far less treacherous path to opportunity.
But the very nature of the ZEDE program is that it must live or die on its own merits. Hondurans will support and move into the ZEDEs if they offer jobs, safety, and the chance for a better life. If not, the ZEDEs will have no purpose, and the law will be rendered useless. In other words, the future of the ZEDEs ultimately depends on the rational choices made by the Hondurans themselves.